Thursday, 10 December 2009

On austerity and affluence

The Fabian Society and Webb Memorial Trust today publish The Solidarity Society, a major 270-page book which reports a two-year research project on strategies to reduce poverty and inequality. Yvette Cooper will be among those speaking at the House of Commons launch this afternoon, on which Next Left will report.

In their introduction, authors Tim Horton and James Gregory set the scene and ask how to prevent poverty slipping off the political agenda at a time of fiscal pressure. They argue that moments of political crisis have often shaped policy politics for three decades, and that a new strategy is now needed for an effective approach to reducing and preventing poverty.

Here is an extract.

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This is an age of austerity – or so we’re told. The first General Election after an epoch-making financial crisis will be dominated by arguments about public spending cuts and the fiscal deficit.

So will issues of poverty, inequality and fairness now slide from public view? Politicians of all parties say no.

“We are in this together” is a refrain heard across the political spectrum. But those campaigning to reduce poverty fear this may well prove little more than rhetoric. If only limited progress was made during the long boom, can we really hope to do more when times are harder?

Yet compare Britain of 1945 to that of 2009. There can be little doubt which was the age of austerity and which of affluence. One was the era of the ration book; the other of the iPod. After the war, Britain had national debt of over 200 per cent of GDP, compared to 60 per cent today. But that country voted for the vision set out in the Beveridge Report of 1942, created a National Health Service free at the point of need, and pledged ’never again’ to the mass unemployment of the 1930s.

Today, even after inflation, our national output is four and a half times greater than it was then.

So the real difference between 1945 and 2009 is not a crisis of affordability. It is a crisis of ambition.

It will be necessary to rebalance the public finances, and debate the different priorities about how to do so. But we should remember too that our societies today, overall, remain the richest the world has ever seen, having long passed the point where aggregate increases in GDP per capita make us all happier. Indeed, our current austerity results from an implosion of that affluence: meltdown in the City has caused economic recession, public debt, growing unemployment and genuine hardship for many.

This should surely remind us that societies have the levels of poverty and inequality that they choose. For many that is a subconscious choice because the ability to choose differently often seems beyond our grasp. But we can see how different societies have made different choices. The belief in the American Dream creates a strong tolerance of poverty in the US which would simply be unacceptable in Scandinavia.

Britain has seen uniquely volatile levels of both low and high poverty and inequality precisely because it has been a ‘swing battleground’ between competing ideas about what’s fair. Wartime solidarity created a commitment to full employment which lasted thirty years and an NHS which remains central to our sense of who we are today.

On the other hand, the anxiety of the 1970s oil shocks created an individualistic backlash, and the attitudes to tax, welfare and poverty of the Thatcher era which still shape our public debates three decades on.

This history also reminds us how much decisions made at moments of crisis matter – and can endure for decades to come. The political choices we make about how we balance budgets today could have consequences that last longer than any economic cycle.

This report shows why they could well shape the politics of the next half century – and how the crisis we face goes deeper than the current financial crisis and recession.

Today we could be at a ‘tipping point’ that sends Britain back towards Victorian levels of inequality and social segregation, and, in the process, makes the solidarity which could challenge that social segregation ever more difficult to recover.

Inequality in Britain today, on some measures, is at its highest since the early 1960s. Despite falls in poverty over the last decade, progress is getting harder. Support for redistribution to help those in poverty is at a record low, with public attitudes to those claiming benefits often harsh and punitive. And important parts of our welfare state often seem to be entrenching and reproducing aspects of inequality, rather than tackling them.

There is a good argument that we have now hit the limits of a strategy of incremental progress through quiet redistribution, of doing good when the ‘marginal pound’ allows. More of the same will now deliver smaller returns, particularly when there is a squeeze on the public finances and increasing demographic pressures on services. If this is not to prove as good as it gets for another generation or more, a different strategy is needed.

"This imaginative, thorough and important report offers a vision of a modern welfare state founded on fairness and respect for all and protection for the poor and vulnerable, and shows how public support can be won for that goal. It should be required reading for any politician thinking of embarking on any further so-called welfare reforms.”– Kate Green, Chief Executive, Child Poverty Action Group.

"By taking 'the long view' of policies to address poverty over the last century, alongside a valuable assessment of current challenges to welfare states and of the importance of public attitudes, the book sets out a clear set of principles and policy mechanisms for the future."– Prof. Jane Lewis, Professor of Social Policy, LSE

”This report is Fabianism at its best - a rigorous, thoroughly researched combination of principled idealism and intelligent pragmatism which charts a new way forward for the welfare state.”– Dr Stuart White, Politics Fellow, Oxford

“'The Solidarity Society could not have been better timed. An eloquent defence of the merits of universalism in fighting poverty, it presents a powerful retort to the growing clamour for scaling back the level of universal welfare provision. As the book demonstrates, attempts to cut so-called 'middle-class benefits` would risk the further erosion of the common citizenship on which the reduction of poverty and a fairer society depends. The authors present a radical and achievable blueprint that finally finish the job started by Beveridge. Whoever forms the next government, it should be at the top of their reading list.” – Stewart Lansley, author